nep-exp New Economics Papers
on Experimental Economics
Issue of 2018‒02‒19
twenty-six papers chosen by

  1. What breaks the chain of unkindness: emotional closure or signaling? By Wendelin Schnedler; Nina Lucia Stephan
  2. Trust behind bars: a longitudinal study of inmates? prosocial preferences By Mario A. Maggioni; Domenico Rossignoli; Simona Beretta; Sara Balestri
  3. The Effect of Incentives in Non-Routine Analytical Team Tasks - Evidence From a Field Experiment By Englmaier, Florian; Grimm, Stefan; Schindler, David; Schudy, Simeon
  4. Group behaviour in tacit coordination games with focal points: An experimental investigation By Stefania Sitzia; Jiwei Zheng
  5. Financial contagion in the laboratory: Does network structure matter? By John Duffy; Aikaterini Karadimitropoulou; Melanie Parravano
  6. An exploratory study of how sleep restriction impacts choice in two classic normal form games. By David L. Dickinson
  7. Do Management Interventions Last? Evidence from India By Nicholas Bloom; Aprajit Mahajan; David McKenzie; John Roberts
  8. Social Interaction and Technology Adoption: Experimental Evidence from Improved Cookstoves in Mali By Jacopo Bonan; Pietro Battiston; Jaimie Bleck; Philippe LeMay Boucher; Stefano Pareglio; Bassirou Sarr; Massimo Tavoni
  9. Reducing Discrimination through Norms or Information: Evidence from a Field Experiment on Student Evaluations of Teaching By Boring, Anne; Philippe, Arnaud
  10. Do people contribute more to intra-temporal or inter-temporal public goods? By Gilles Grolleau; Angela Sutan; Radu Vranceanu
  11. Demand response as a common pool resource game: Nudges versus prices By Buckley, P.; Llerena, D.
  12. Social Insurance and Occupational Mobility By German Cubas; Pedro Silos
  13. What Do Workplace Wellness Programs Do? Evidence from the Illinois Workplace Wellness Study By Damon Jones; David Molitor; Julian Reif
  14. Aspiration Adaptation in Resource-Constrained Environments By Sebastian Galiani; Paul J. Gertler; Raimundo Undurraga
  15. Political self-serving bias and redistribution By Bruno Deffains; Romain Espinosa; Christian Thöni
  16. Construction of two-level nonregular designs of strength three with large run sizes By VÁZQUEZ-ALCOCER, Alan; XU, Hongquan
  17. How Can We Induce More Women to Competitions? By Masayuki Yagasaki; Mitsunosuke Morishita
  18. Biases in Beliefs: Experimental Evidence By Dominik Bauer; Irenaeus Wolff
  19. Guilt and participation By Amrish Patel; Alec Smith
  20. Disclosure and Pricing of Attributes By Smolin, Alex
  21. Uninvadable social behaviors and preferences in group-structured populations By Alger, Ingela; Lehmann, Laurent; Weibull, Jörgen W.
  22. Risky Decisions and the Opportunity Costs of Time By Jan Hausfeld; Sven Resnjanskij
  23. Dynamics of observables in rank-based models and performance of functionally generated portfolios By Sergio A. Almada Monter; Mykhaylo Shkolnikov; Jiacheng Zhang
  24. Evaluación de impacto del programa de acompañamiento familiar de Uruguay Crece Contigo By Alejandra Marroig; Ivone Perazzo; Gonzalo Salas; Andrea Vigorito
  25. Tell the truth or not? The Montero mechanism for emissions control at work By Requate, Tilman; Camacho-Cuena, Eva; Ch'ng, Kean Siang; Waichman, Israel
  26. Number of bidders and the winner’s curse By Ronald Peeters; Anastas P. Tenev

  1. By: Wendelin Schnedler (University of Paderborn); Nina Lucia Stephan (University of Paderborn)
    Abstract: Previous experimental studies show that subjects who receive little in a dictator game, pass on less to a third person when they are dictators themselves (they reciprocate negatively to a third party). However, when they can write a letter to their dictator, subjects are less likely to pass on the unkindness. There are two potential explanations for this phenomenon: First, writing the letter may help to emotionally ‘close the case’ (closure explanation). Second, the opportunity to write a letter is a sign that it is not ‘ok’ to imitate the previous dictator (signal explanation). The present study examines with an experiment which explanation is more suitable.\\ The novelty in our design is a domain shift, making imitation impossible: The first subject does not decide on how to split a pot of money but can instead treat the second subject unkindly by assigning her to an annoying instead of a funny task. We find that letter writing nevertheless increases the average amount passed on in the subsequent dictator game. Thus, the closure explanation is perhaps more suitable. There is, however, one caveat: while writing the letter may make people emotionally ‘close the case’, this is not reflected in how happy people rate themselves.
    Keywords: experimental economics, chain of unkindness, imitation, emotional closure, cooling down
    JEL: D91 C91 D03
    Date: 2018–01
  2. By: Mario A. Maggioni; Domenico Rossignoli; Simona Beretta; Sara Balestri
    Abstract: The paper presents the results of a Longitudinal Lab-in-the-Field Experiment implemented between September 2015 and July 2016 in two State Prisons in California (USA). A subset of eligible inmates willing to undertake GRIP (Guiding Rage Into Power), an offender accountability program, were randomly assigned to it. The paper tests whether the participation to this program (used as a treatment in the experiments), based on building strong relationships and mutual help, affects prosocial preferences of participants, with specific reference to trust. The results of a Difference-in-Differences (DID) estimation procedure show that trust significantly increased in GRIP participants compared to the control group. This result is robust to alternative estimation techniques and to the inclusion of an endogenous behavioral measure of altruism.
    JEL: C91 C92 D03 Z10
    Date: 2017
  3. By: Englmaier, Florian (LMU Munich); Grimm, Stefan (LMU Munich); Schindler, David (Tilburg University); Schudy, Simeon (LMU Munich)
    Abstract: Despite the prevalence of non-routine analytical team tasks in modern economies, little is known about how incentives influence performance in these tasks. In a field experiment with more than 3000 participants, we document a positive effect of bonus incentives on the probability of completion of such a task. Bonus incentives increase performance due to the reward rather than the reference point (performance threshold) they provide. The framing of bonuses (as gains or losses) plays a minor role. Incentives improve performance also in an additional sample of presumably less motivated workers. However, incentives reduce these workers\' willingness to \"explore\" original solutions.
    Keywords: team work; bonus; incentives; loss; gain; non-routine; exploration;
    JEL: C92 C93 J33 D03 M52
    Date: 2018–02–08
  4. By: Stefania Sitzia (University of East Anglia); Jiwei Zheng (Universtiy of East Anglia)
    Abstract: This paper reports an experimental investigation of Schelling's theory of focal points that compares group and individual behaviour. We find that when players' interests are perfectly aligned, groups choose more often the label salient option and achieve higher coordination success than individuals. However, in games with conflict of interest, groups do not always perform better than individuals, especially when the degree of conflict is substantial. We also find that groups outperform individuals in games in which identifying the solution to the coordination problem requires some level of cognitive sophistication (i.e. trade-off games). Finally, players that successfully identify the solution to these games achieve also greater coordination rates in games with a low degree of conflict than other players. This result raises questions of whether finding the focal point is more a matter of logic rather than imagination as instead Schelling argued.
    Keywords: groups, coordination, label cues, cognition
    JEL: C72 C78 C91 C92
    Date: 2018–01–30
  5. By: John Duffy (University of California, Irvine); Aikaterini Karadimitropoulou (University of East Anglia); Melanie Parravano (Newcastle University)
    Abstract: We design and report on the first laboratory experiment exploring the role of interbank network structure and premature liquidation costs for the likelihood of a financial contagion. The laboratory provides the control necessary to understand the role played by interbank network configurations and liquidation costs for the fragility of the financial system. Specifically, we study the likelihood of financial contagion in complete and incomplete networks of banks that are linked in terms of interbank deposits as in the model of Allen and Gale (2000) and we further vary the cost of premature liquidation. Subjects play the role of depositors who must decide whether or not to withdraw their funds from their interconnected banks. We find that when liquidation costs are high, a complete network structure enabling efficient risk sharing is significantly less vulnerable to financial contagions than an incomplete network structure. However, when liquidation costs are low, network structure does not matter as much for the frequency of financial contagions. We conclude that low liquation costs or a more complete network structure can be viewed as substitutes for reducing the frequency of financial contagions.
    Keywords: contagion, networks, experiments, bank runs, interbank deposits, financial fragility
    JEL: C92 E44 G21
    Date: 2017–12
  6. By: David L. Dickinson
    Abstract: We experimentally manipulate sleep levels to examine the impact of sleepiness on strategic oneshot interactions. Where multiple Nash equilibria exist (the Battle-of-the-Sexes game), sleepy subjects play closer to the mixed strategy prediction than do well-rested subjects. When there is a unique equilibrium in mixed strategies (the Penalty Kick game), strategy play of sleepy subject shows indications of reinforcement play. Sleepiness may, at least in some games, promote use of simple heuristics that focus on previous outcomes even when interactions are one-shot. Key Words: Sleep deprivation, game theory, heuristics, experiments
    JEL: C92 D91 C72
    Date: 2018
  7. By: Nicholas Bloom; Aprajit Mahajan; David McKenzie; John Roberts
    Abstract: Beginning in 2008, we ran a randomized controlled trial that changed management practices in a set of Indian weaving firms (Bloom et al. 2013). In 2017 we revisited the plants and found three main results. First, while about half of the management practices adopted in the original experimental plants had been dropped, there was still a large and significant gap in practices between the treatment and control plants. Likewise, there remained a significant performance gap between treatment and control plants, suggesting lasting impacts of effective management interventions. Second, while few management practices had demonstrably spread across the firms in the study, many had spread within firms, from the experimental plants to the non-experimental plants, suggesting limited spillovers between firms but large spillovers within firms. Third, managerial turnover and the lack of Director time were two of the most cited reasons for the drop in management practices in experimental plants, highlighting the importance of key employees.
    JEL: M0 O0
    Date: 2018–01
  8. By: Jacopo Bonan (FEEM, LdA and CMCC); Pietro Battiston (University of Milan-Bicocca, Italy); Jaimie Bleck (University of Notre Dame, USA); Philippe LeMay Boucher (Heriot Watt University, UK); Stefano Pareglio (Università Cattolica del Sacro Cuore and FEEM, Italy); Bassirou Sarr (Paris School of Economics, France); Massimo Tavoni (Politecnico di Milano and FEEM, Italy)
    Abstract: We investigate the role of social interaction in technology adoption by conducting a field experiment in urban Mali. We invite women to attend a training session, where information on a more efficient cooking stove is provided along with the opportuinity to purchase the product at market price. During that session we randomly assign participants to receive information on a peer's actual purchase of an improved cookstove. We find that women are more likely to purchase during our intervention and use the product in the following six to nine months if the information they receive is on a peer who purchased the product and whose opinion is respected. In general, we find positive direct and spillover effects on attending the session. We then investigate whether social interaction plays a role in the natural diffusion of this technology by putting forward evidence that women who participated in the session and did not buy are more likely to later adopt the product when more women living around them own it. We investigate the various mechanisms of social interaction potentially at play and provide evidence supporting imitation effects, rather than social learning or constraint interaction.
    Keywords: Technology Adoption, Social Interaction Cookstoves, Mali
    JEL: D91 O33 O13 M31
    Date: 2018–01–29
  9. By: Boring, Anne; Philippe, Arnaud
    Abstract: We conduct a field experiment to assess the impact of two different interventions designed to reduce gender biases in student evaluations of teaching (SET). In the first intervention, students received a normative statement by email, essentially reminding them that they should not discriminate in SETs. In the second intervention, the normative statement was augmented with precise information on how other students in the exact same situation had discriminated against female teachers in the past. While the pure normative statement had no significant impact on SETs, the informative statement appears to have reduced gender biases against female teachers. This effect mainly comes from a change in male students’ evaluation of female teachers.
    JEL: C93 I23 J71
    Date: 2017–11
  10. By: Gilles Grolleau (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, Laboratoire d'Expérimentation en Sciences Sociales et Analyse des Comportements (LESSAC) - GESC Dijon - Groupe Ecole Supérieure de Commerce Dijon - Bourgogne); Angela Sutan (Laboratoire d'Expérimentation en Sciences Sociales et Analyse des Comportements (LESSAC) - GESC Dijon - Groupe Ecole Supérieure de Commerce Dijon - Bourgogne); Radu Vranceanu (Business School - UAB - The University of Alabama at Birmingham [ Birmingham], UMR 8184 Théorie Economique Modélisation et Applications (THEMA) - CNRS - Centre National de la Recherche Scientifique, Université de Cergy Pontoise)
    Abstract: We introduce a dynamic public goods game, where an individual's investment in the public good at a given round provides benefits to other individuals in the next round, and the individual himself benefits from investments in the public good made by his current group members in the previous round. Subjects turn out to be more generous in this inter-temporal context, than in a standard public goods experiment where contributions and transfers are exchanged at the same period. Furthermore, when known, benefits from the past investment are positively related to the individual's current investment in the public good.
    Keywords: dynamic public goods,inter-temporal transfers,voluntary contribution mechanism,contribution vs. investment,public goods,dynamic game,laboratory experimentation,profit,altruism,bien public,rentabilité des investissements,contribution volontaire,jeu dynamique,expérimentation en laboratoire,bénéfice,altruisme
    Date: 2016
  11. By: Buckley, P.; Llerena, D.
    Abstract: The aim of demand response is to make energy consumption more flexible during peak periods. Using a contextualised CPR framework, we study energy consumption choices. Subjects decide the consumption level of five activities during 10 periods. The total consumption of these activities is the CPR contribution, and payoffs depend on own consumption and the amount consumed by the group. In the nudge treatment, subjects are nudged towards the socially optimal level of consumption using injunctive norms. The average consumption observed in the nudge treatment is used to calculate the price implemented in the price treatment. The objective is to quantify the nudge via an equivalent price. The main hypotheses are: consumption choices will be lower in the treatment groups compared to the control groups; when the price level is fixed according to the nudge result, consumption choices in the price treatment will be equivalent to those in the nudge treatment. Across all 10 periods, consumption is significantly lower in the nudge treatment, and higher for control groups. In the price treatment, consumption remains between the two at or slightly above the target. We conclude that the nudge treatment performs as well as an equivalent price without the implied loss of welfare. When comparing decisions under the nudge and price treatments to the control groups, the consumption decisions are significantly different from period 2 for the nudge and, consistently different from period 7 for the price. We conclude that the nudge is understood and integrated into subjects' decision making quicker than an equivalent price.
    JEL: C91 C92 D62 D91 H21
    Date: 2018
  12. By: German Cubas (Department of Economics, University of Houston); Pedro Silos (Department of Economics, Temple University)
    Abstract: This paper studies how insurance from progressive taxation improves the matching of workers to occupations. We propose an equilibrium dynamic assignment model to illustrate how social insurance encourages mobility. Workers experiment to find their best occupational fit in a process filled with uncertainty. Risk aversion and limited earnings insurance induce workers to remain in unfitting occupations. We estimate the model using microdata from the United States and Germany. Higher earnings uncertainty explains the U.S. higher mobility rate. When workers in the United States enjoy Germany's higher progressivity, mobility rises. Output and welfare gains are large.
    Keywords: Progressive Taxation, Social Insurance, Occupational Choice
    JEL: E21 H24 J31
    Date: 2018–02
  13. By: Damon Jones; David Molitor; Julian Reif
    Abstract: Workplace wellness programs cover over 50 million workers and are intended to reduce medical spending, increase productivity, and improve well-being. Yet, limited evidence exists to support these claims. We designed and implemented a comprehensive workplace wellness program for a large employer with over 12,000 employees, and randomly assigned program eligibility and financial incentives at the individual level. Over 56 percent of eligible (treatment group) employees participated in the program. We find strong patterns of selection: during the year prior to the intervention, program participants had lower medical expenditures and healthier behaviors than non-participants. However, we do not find significant causal effects of treatment on total medical expenditures, health behaviors, employee productivity, or self-reported health status in the first year. Our 95% confidence intervals rule out 78 percent of previous estimates on medical spending and absenteeism. Our selection results suggest these programs may act as a screening mechanism: even in the absence of any direct savings, differential recruitment or retention of lower-cost participants could result in net savings for employers.
    JEL: I1 J3 M5
    Date: 2018–01
  14. By: Sebastian Galiani; Paul J. Gertler; Raimundo Undurraga
    Abstract: We use a multi-country field experiment to test the effect of a slum-housing intervention on the housing aspirations of non-beneficiary neighbors. Initially after treatment, nontreated households’ aspirations to upgrade their dwelling are significantly higher compared to the treatment group, suggesting that they aspire to “keep-up” with their treatment Joneses’. No effects are found, however, on housing investments. Eight months later, the aspirational effect disappears. Estimates based on a structural model of aspiration adaptation show that the decay rate is 38% per month. Our evidence suggests that simply fostering higher aspirations may be insufficient to encourage forward-looking behavior among the poor.
    JEL: O1
    Date: 2018–01
  15. By: Bruno Deffains (CRED - Centre de Recherches en Economie et Droit - UP2 - Université Panthéon-Assas - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche, IUF - Institut Universitaire de France - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche, University of Liverpool [Liverpool]); Romain Espinosa (CRED - Centre de Recherches en Economie et Droit - UP2 - Université Panthéon-Assas - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche); Christian Thöni (UNIL - Université de Lausanne)
    Abstract: We explore the impact of the self-serving bias on the supply and demand for redistribution. We present results from an experiment in which participants decide on redistribution after performing a real e↵ort task. Dependent on individual performance, participants are divided into two groups, successful and unsuccessful. Participants' success is exogenously determined, because they are randomly assigned to either a hard or easy task. However, because participants are not told which task they were assigned to, there is ambiguity as to whether success or failure should be attributed to internal or external factors. Participants take two redistribution decisions. First, they choose a supply of redistribution in a situation where no personal interests are at stake. Second, they choose a redistributive system behind a veil of ignorance. Our results confirm and expand previous findings on the self-serving bias: successful participants are more likely to attribute their success to their e↵ort rather than luck, and they opt for less redistribution. Unsuccessful participants tend to attribute their failure to external factors and opt for more redistribution. We demonstrate that the self-serving bias contributes to a polarization of the views on redistribution.
    Keywords: polarization,Redistribution,self-serving bias,experimental,veil of ignorance
    Date: 2016
  16. By: VÁZQUEZ-ALCOCER, Alan; XU, Hongquan
    Abstract: Two-level orthogonal arrays of strength 3 permit the study of the main effects and the two-factor interactions of the experimental factors. These arrays are classified into regular and nonregular designs. Good regular designs are available in the literature for large run sizes that are a power of 2. In contrast, good nonregular designs, which have run sizes that are multiples of 8 and are more exible alternatives to regular designs, are not available for large numbers of runs because their construction is challenging. The contribution of this paper is a collection of strength-3 nonregular designs with large run sizes that, to the best of our knowledge, have not been explored before in the design literature. Using theoretical results and algorithmic approaches, we generate nonregular designs with up to 1280 runs. Our designs fill the gaps between the available strength-3 designs with large run sizes and outperform comparably-sized regular designs in terms of the aliasing among the two-factor interactions. We show the applicability of the new collection of strength-3 designs using a drug combination experiment.
    Keywords: Drug combination experiment, Generalized minimum aberration, Orthogonal array, Two-factor interaction, Variable neighborhood search
    Date: 2018–02
  17. By: Masayuki Yagasaki; Mitsunosuke Morishita
    Abstract: Why women avoid participating in a competition and how can we encourage them to participate in it? In this paper, we investigate how social image concerns affect women's decision to compete. We first construct a theoretical model and show that participating in a competition, even under affirmative action policies favoring women, is costly for women under public observability since it deviates from traditional female gender norms, resulting in women's low appearance in competitive environments. We propose and theoretically show that introducing prosocial incentives in the competitive environment is effective and robust to public observability since (i) it induces women who are intrinsically motivated by prosocial incentives to the competitive environment and (ii) it makes participating in a competition not costly for women from social image point of view. We conduct a laboratory experiment where we randomly manipulate the public observability of decisions to compete and test our theoretical predictions. The results of the experiment are fairly consistent with our theoretical predictions. We suggest that when designing policies to promote gender equality in competitive environments, using prosocial incentives through company philanthropy or other social responsibility policies, either as substitutes or as complements to traditional affirmative action policies, could be promising.
    Date: 2018–01
  18. By: Dominik Bauer; Irenaeus Wolff
    Abstract: Many papers have reported behavioral biases in belief formation that come on top of standard game-theoretic reasoning. We show that the processes involved depend on the way participants reason about their beliefs. When they think about what everybody else or another ‘unspeci€fied’ individual is doing, they exhibit a consensus bias (believing that others are similar to themselves). In contrast, when they think about what their situation-speci€fic counterpart is doing, they show ex-post rationalization, under which the reported belief is €‹fitted to the action and not vice versa. Our €findings suggest that there may not be an ‘innocent’ belief-elicitation method that yields unbiased beliefs. However, if we ‘debias’ the reported beliefs using our estimates of the di‚fferent e‚ffects, we €find no more treatment e‚ffect of how we ask for the belief. ‘The ‘debiasing’ exercise shows that not accounting for the biases will typically bias estimates of game-theoretic thinking upwards.
    Keywords: Belief Elicitation, Belief Formation, Belief-Action Consistency, Framing E‚ffects, Projection, Consensus E‚ffect, Wishful ‘Thinking, Hindsight Bias, Ex-Post Rationalization
    Date: 2018
  19. By: Amrish Patel (University of East Anglia); Alec Smith (Virginia Tech University)
    Abstract: How does guilt affect participation in providing public goods? We characterise and analyse completely mixed symmetric equilibria (CMSE) in participation games where players are guilt averse. We find that relative to material preferences, guilt aversion can: facilitate the existence of CMSE; increase or decrease participation; and imply that group size has a non-monotonic effect on participation. Using our equilibrium characterisation we also re-analyse experimental data on participation games and find a low, but positive, guilt sensitivity parameter.
    Keywords: participation, threshold public good, volunteer's dilemma, psychological games, guilt aversion
    JEL: C72 H41
    Date: 2018–01–30
  20. By: Smolin, Alex
    Abstract: A monopolist seller owns an object that has several attributes. A buyer is privately informed about his tastes and uncertain about the attributes. The seller can disclose attribute information to the buyer in a form of a statistical experiment. The seller offers a menu of call options varying in upfront payments, experiments, and strike prices. I study revenue-maximizing menus and show that optimal experiments belong to a simple class of linear disclosures. I fully characterize an optimal menu for a class of single-minded buyers. Surprisingly, the menu is nondiscriminatory and can be implemented by a single partial disclosure followed by a posted price.
    Keywords: Attributes, Information Design, Mechanism Design, Private Disclosure, Call Options, Multidimensional Screening, Demand Transformation
    JEL: D42 D82 D83
    Date: 2017–10
  21. By: Alger, Ingela; Lehmann, Laurent; Weibull, Jörgen W.
    Abstract: Humans have evolved in populations structured in groups that extended beyond the nuclear family. Individuals interacted with each other within these groups and there was limited migration and sometimes conáicts between these groups. Suppose that during this evolution, individuals transmitted their behaviors or preferences to their (genetic or cultural) o§spring, and that material outcomes resulting from the interaction determined which parents were more successful than others in producing (genetic or cultural) o§spring. Should one then expect pure material self-interest to prevail? Some degree of altruism, spite, inequity aversion or morality? By building on established models in population biology we analyze the role that di§erent aspects of population structureó such as group size, migration rates, probability of group conáicts, cultural loyalty towards parentsó play in shaping behaviors and preferences which, once established, cannot be displaced by any other preference. In particular, we establish that uninvadable preferences under limited migration between groups will consist of a materially self-interested, a moral, and an other-regarding component, and we show how the strength of each component depends on population structure.
    Keywords: Strategic interactions; Preference evolution; Evolution by natural selection; Cultural transmission; Pro-sociality; Altruism; Morality; Spite
    JEL: A12 A13 B52 C73 D01 D63 D64 D91
    Date: 2018–02
  22. By: Jan Hausfeld; Sven Resnjanskij
    Abstract: We investigate the trade-off between the costs of decisions and their quality in a simple model in which a decision maker trades off using time for arriving at a risky decision and for pursuing an alternative activity. When decision time increases the quality of the decision, rational agents consider the opportunity cost of time when deciding how much time to allocate to decision-making. In a lab experiment, we introduce exogenous variation in the opportunity costs of time allocated to making risky decisions by reducing the subjects’ payoffs as decision time increases. Using structural estimations, we infer preferences and decision errors. We find that an increase in the opportunity cost of time reduces, ceteris paribus, decision time, and that reducing the time available for making decisions increases the probability of mistakes. Moreover, we show that using more time when making small-stake decisions does not necessarily indicate irrational behavior, and neither does a positive correlation between decision time and the probability of making mistakes. Such behavior is compatible with our model of rational decision-making.
    Keywords: decision under risk, time constraints, opportunity costs, rational behavior, lab experiment, structural estimation
    Date: 2017
  23. By: Sergio A. Almada Monter; Mykhaylo Shkolnikov; Jiacheng Zhang
    Abstract: In the seminal work [9], several macroscopic market observables have been introduced, in an attempt to find characteristics capturing the diversity of a financial market. Despite the crucial importance of such observables for investment decisions, a concise mathematical description of their dynamics has been missing. We fill this gap in the setting of rank-based models and expect our ideas to extend to other models of large financial markets as well. The results are then used to study the performance of multiplicatively and additively functionally generated portfolios, in particular, over short-term and medium-term horizons.
    Date: 2018–02
  24. By: Alejandra Marroig (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Ivone Perazzo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Gonzalo Salas (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Andrea Vigorito (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: We present an experimental evaluation of Acompañamiento Familiar y Trabajo de Cercanía, the home visits component of the programme Uruguay Crece Contigo. We assess a wide set of outcomes related to child health and nutritional status, child development, access to social protection schemes and other household well-being outcomes. Our research is based on two surveys specially designed to carry out this evaluation. We find a significant improvement in the nutritional status of children and access to an in-kind transfer, Tarjeta Uruguay Social, in the form of a food card. At the same time, we also find an improvement in child development, specifically in the gross motor component of ASQ:SE. The potential channels explaining these results include home visits, access to resources, increased attendance to child care, changes in parenting styles as well as reduced maternal depression.
    Keywords: Experimental impact evaluation, home visits, child development, nutrition, Uruguay, Uruguay Crece Contigo
    JEL: I38 I14 C93
    Date: 2017–12
  25. By: Requate, Tilman; Camacho-Cuena, Eva; Ch'ng, Kean Siang; Waichman, Israel
    Abstract: We experimentally test the truth-telling mechanism proposed by Montero (2008) for eliciting firms' abatement costs. We compare this mechanism with two well-known alternative allocation mechanisms, grandfathering and pure auctioning. We conducted 27 treatments with a total of 623 participants, controlling for the allocation mechanism, the number of firms, and the true maximal emission levels. We find that, in line with the theoretical predictions, firms over-report their maximal emissions under grandfathering and under-report them under pure auctioning, while under Montero's mechanism firms almost always report their maximal emissions truthfully. However, in terms of efficiency, the difference between Montero's mechanism and pure auctioning disappears when there is more than one firm in the market.
    Keywords: mechanism design,environmental policy,permit trading,auctions,experiment
    JEL: C92 D44 L51 Q28
    Date: 2018
  26. By: Ronald Peeters (Department of Economics, University of Otago, New Zealand); Anastas P. Tenev (Department of Economics, Maastricht University)
    Abstract: Within an affiliated value auction setting, we study the relationship between the number of bidders and the winner’s curse in terms of its occurrence and its expected harm. From a design perspective, we find that both the number of bidders and the level of affiliation are instrumental when choosing an auction format and whether to encourage or discourage bidder participation.
    Keywords: Winner’s curse; number of bidders; affiliated value auctions
    JEL: D44 D82 H57
    Date: 2018–01

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